Primary Homes Are Not Net Worth
Top reasons to not include your home in your net worth calculation
I haven’t stirred the pot in a while, so lets lob this grenade out there.
Your Primary home does not belong in your net worth calculation. Thank you & Good night…
Your Primary home does not belong in your net worth calculation.
Yup. Unless you are a grifting gooroo who is padding their stats for twitter clout, there is no good reason to include your home equity in your net worth. But there are a lot of reasons why you shouldn’t.
It comes down to the main purpose of tracking your net worth. Why are you doing it?
For most of us, you track your net worth to track your progress towards a goal. You want to make sure that, over a long-enough time frame, your net worth is increasing as you save and invest. You likely want to see how you compare vs. your retirement goals. If you are a FIRE guy, you want to know how soon you can go from living a boring frugal miserable working life, retire, and start living a boring frugal miserable non-working life.
With those goals in mind, what does putting your home equity down in your net worth do to help hit those goals?
By the end of this post, you will hopefully agree the answer is, “it doesn’t, in fact it makes it harder to achieve those objectives”.
But first, why only grifting gooroos should include home equity in their net worth…